Taking on a mortgage is one of the largest financial commitments you will make in your lifetime. The terms of your mortgage can have a significant influence on your monthly budget.
Fortunately, homeowners are not stuck with their original mortgage terms forever. You do have the option to refinance your home.
Here are three questions you can ask yourself to determine if refinancing your home is the right option.
1. Do You Need to Lower Your Monthly Payment?
Financial circumstances can change at any time. This means that while your mortgage payment may have been affordable when you secured your mortgage, you may be struggling under the weight of that same monthly payment now.
Refinancing your home can be a great way to lower your monthly payment.
There are two ways refinancing your mortgage can reduce your monthly payment amount. The first is by securing a lower interest rate for your loan. The second is by extending the repayment period on the remaining balance of your mortgage.
2. Do You Need a Large Sum of Money?
Unexpected expenses can wreak havoc on your family's budget. A family member might fall ill. You may need cash for schooling or medical bills. You could even find yourself facing legal trouble. Refinancing your home can be a way to access a large sum of money.
You do have the option of accessing your home's equity when refinancing your mortgage. The equity you have built by paying your initial mortgage over time can be deposited into your account and used immediately.
Home equity can help your family get through any unexpected expenses that may arise now or in the future.
3. Do You Want to Stop Paying Mortgage Insurance Premiums?
If you financed your home using an FHA mortgage, there's a good chance you pay mortgage insurance premiums each year. The amount of money you will pay in mortgage insurance premiums will depend on how much money you put down when securing your loan and the total balance of your loan.
Unfortunately, mortgage insurance premiums must be paid over the entire life of an FHA loan. You can eliminate this expense by refinancing your home with a mortgage that is not backed by FHA.
Refinancing to get rid of an FHA loan could help you save a significant amount of money as you repay the balance of your mortgage.
Talk to your loan officer about the benefits of real estate and the reason for refinances today.Share